⚖️Loans
How do DeFi loans work within Skyline Digital’s platform?
Skyline Digital’s new DeFi loan feature enables users to access DeFi loans directly through on-chain providers like Aave and Spark, to then execute fiat payments or crypto exchange with the borrowed cryptocurrencies.
To access this new feature, you must be fully onboarded after completing the Know Your Customer (KYC) or Know Your Business (KYB) verification process (see Onboarding FAQs).
The loan process involves the following steps:
Choose Your Service: Start by selecting the service you want to use, such as “crypto to fiat.”
Add Payment Details: Enter the specifics for any payments you wish to make. You can include multiple currencies and beneficiaries if needed, for greater convenience.
Proceed to Payment Options: Once you’ve added all your payments, click “Continue.” In the popup, select “Pay with DeFi Loan” as your payment option.
Set Loan Terms: Customize your DeFi loan by entering your loan terms. You’ll be able to review important details like collateral requirements, Health Factor, APY, and more. For added flexibility, use the Advanced configuration to explore different providers or adjust your collateral and stablecoin options.
Sign the Transaction: Use your wallet to sign the DeFi loan transaction. This secures the collateral with our smart contract, ensuring a safe and efficient process.
Confirm and Finalize: Take a moment to review all details, then accept the final quote. You’re all set!
All DeFi loan terms, including interest rates, are provided directly by the DeFi protocol, and repayment is handled directly with them at any time. Skyline Digital does not intermediate the DeFi loan nor act as lender, therefore it does charge any fees or intervene in the DeFi loan repayment process.
Which providers can you use?
Skyline Digital aggregates DeFi loans from various top-notch DeFi providers, including Aave and Spark. As we evolve, we will accommodate more provirers that can offer the best DeFi loans options.
If you have a specific provider in mind that you'd like us to include, please let us know.
How can I check the interest rate?
Interest rates for DeFi loans can be viewed during the configuration process on Skyline Digital’s platform. The net Annual Percentage Yield (APY) is displayed on the main screen, and more detailed information about each option, including different interest rates per token, can be accessed by clicking on “Advanced”.
During the entire time that your DeFi loan is active, you can continuously check the interest rate on your selected providers’ dashboard, as well as the health factor value (see more information below).
How is the interest charged?
Interest on your DeFi loan is charged at the time of repayment to the original provider where the DeFi loan was initiated. Skyline Digital does not collect any interest from your DeFi loan.
Does Skyline Digital charge a fee for this service?
Skyline Digital does not charge any fees for accessing the DeFi Loans feature. However, standard fees apply for the execution of related payment or exchange transactions, and these will be displayed during the transaction configuration process.
What are the requirements for DeFi loans?
To access DeFi loans through Skyline Digital, you must first use one of our AML-regulated services, such as fiat payment orders or crypto exchanges. You’ll need to complete our Know Your Customer (KYC) or Know Your Business (KYB) verification, connect your wallet, and deposit a collateral token accepted by the DeFi provider. Additionally, you’ll be required to review and accept a disclaimer outlining the terms and independence of the DeFi protocols. DeFi loan proceeds can then be used for payments or swaps through our platform.
Which cryptocurrencies can be used for collateral?
The list of acceptable collateral tokens varies depending on the chosen provider and market conditions. Please refer to our platform for the most up-to-date list of eligible cryptocurrencies.
How can I repay the DeFi loan?
DeFi loans must be repaid directly to the provider as specified in the DeFi loan details. If you prefer to use fiat currency to prepare for repayment, Skyline Digital provides tools to assist you. By contacting the OTC desk, you can access an option to calculate the owed amount and initiate an on-ramp or swap to receive the necessary funds in your wallet.
Where can I view the details of my DeFi loan(s)?
You can view all details of your DeFi loan(s) directly in the Loans section of our platform.
Can I repay all or part of my DeFi loan in advance?
Yes, you can repay your loan partially or in full at any time directly through your preferred provider’s page. A link to the provider’s page is always available on your Skyline Digital Loans details page.
Can I repay the loan in another coin?
No, DeFi loans must be repaid in the stablecoin originally borrowed. However, if you wish to use fiat or another crypto, we can assist you in preparing for repayment. Through our OTC desk, you can convert fiat to the required stablecoin, which can then be used to complete the repayment directly with the provider.
What is the role of the Health Factor in my DeFi loan?
The Health Factor is a crucial numeric indicator of the safety of your collateral relative to the borrowed amount. It helps monitor the risk of liquidation for the providers, with a value above 1.0 considered safe.
What happens if my crypto collateral goes down in value?
If the value of your collateral decreases, your Health Factor may drop. A Health Factor below 1.0 may trigger the liquidation of your collateral to cover the DeFi loan.
How is the Health factor evaluated on a DeFi loan?
The Health Factor is calculated based on the weighted average of the liquidation thresholds of your collateral assets and the total borrowed value. A higher Health Factor indicates lower risk. If it falls below 1.0, your position may be liquidated to maintain solvency.
Can I see different DeFi loan options and compare them?
Yes, you can use the Advanced Configuration feature to view and compare different DeFi loan options, including providers, stablecoins, and collateral choices, to find the best deal for you and choose your preferred provider.
How do I set the deposit allowance for my collateral?
During the DeFi loan process, you will be prompted to approve an on-chain transaction to set a deposit allowance in your previously chosen cryptocurrency. This allows the smart contract to automatically withdraw the necessary collateral from your wallet to complete the crypto to fiat loan procedure.
What happens if I don't set a sufficient deposit allowance?
If the deposit allowance is insufficient, the transaction may fail. In this case, you will receive a notification / message on Skyline Digital’s platform and you will need to approve a higher allowance to proceed with the DeFi loan.
Are there any risks associated with setting an unlimited deposit allowance?
Yes, setting an unlimited deposit allowance for your DeFi loan can improve transaction speed and efficiency, but it also carries certain risks. By granting unlimited access to your funds, you could be exposed to potential unauthorized access, exploitation of smart contract vulnerabilities, or unforeseen protocol updates. Blockchain technology, while secure, is not immune to these risks, and funds could be at risk in the event of malicious activity or technical failures. We recommend carefully considering these risks and only granting allowances that align with your risk tolerance and understanding of the DeFi protocol. If in doubt, seek professional advice before proceeding.
What if I need assistance during the DeFi loan process?
If you need help at any stage, you can contact our support team through the "Need help?" option available on the platform.
How are the fees structured for different DeFi loan amounts?
Fees are based on the DeFi loan amount and may include transaction and banking fees. Detailed fee information will be provided during the DeFi loan configuration process.
Is there a limit to how many DeFi loans I can take out at once?
The number of DeFi loans you can take out at any given time may be limited by your collateral and the specific policies of the providers. You must check with each provider to understand detailed limits.
Can I change my collateral after taking out a DeFi loan?
No, once the DeFi loan is executed, the collateral cannot be changed. Ensure you choose the appropriate collateral before finalizing the DeFi loan.
What should I do if I face issues with the DeFi loan repayment?
If you encounter issues with the DeFi loan repayment, please get in touch with the provider directly through the link provided in your Skyline Digital Loans details page. For assistance in preparing for repayment with fiat currency, you can reach out to Skyline’s OTC desk.
This post is intended for informational purposes only and does not offer financial, legal, or investment advice. Skyline Digital does not provide personalized financial advice and encourages users to consult with professionals before engaging in DeFi lending or borrowing.
Please contact our support team at @skylineotc for any info or if you have any questions.
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